Piece written by Alexa Smith, Trive Financial Market Analyst
A surge rippled through the S&P 500 Futures (CME: ES), ignited by the remarkable performance of Nvidia (ISIN: US67066G1040), the world’s preeminent chipmaker. As the company’s quarterly results shattered expectations, confidence in the burgeoning AI landscape soared, with Microsoft (ISIN: US5949181045) and Alphabet (ISIN: US02079K3059) experiencing notable increases. Will the Fed threaten the index’s gains?
With the Jackson-Hole Symposium approaching, the interest rate path of the Fed hangs in the balance. Resilient macroeconomic data in the US and rising inflation support an additional interest rate hike before the end of the year, but rising yields dampen the hawkish tone, rebounding uncertainty throughout the equity market.
Technical
Bearish momentum succeeded in breaking down the lower boundary of the descending channel pattern, encouraging a pullback toward the 4362.25 support. However, a downward trend failed to gain traction, bolstering the index futures to trade within the channel. Supported by oversold levels, the price action edged above the 50-day moving average, encouraging the index futures to break down the channel resistance and sustain a leg up towards the Golden Ratio.
The S&P 500 Futures now sit at a significant juncture at the 100-day moving average line. If the price action breaks down the 4477 resistance set up by the 100-day moving average line, an uptrend may be sustained toward the 4628.50 major resistance. However, the 100-day moving average line could prevent a leg up, encouraging a pullback towards the 4362.25 major support.
Summary
A hawkish Fed encouraged the S&P 500 Futures to pull back in fear of an additional interest rate hike before the end of the year. However, strong earnings have propelled the index futures out of the descending channel pattern and toward the 4477 resistance at the 100-day moving average line. If the 100-day moving average is rejected, the index may be encouraged to retest the 4362.25 major support. However, a move above the 4477 level may bolster the index towards the 4628.5 major resistance.
Sources: TradingView, Reuters
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